Re: [RT] cycles

["Jim White" <jwhite431@xxxxxxxxxxx>]

Jim,

Thanks for the reply and references. When I began this game I studied just about all the cycle methods available including Hurst and Delta. I doubt that there is a cycle book of note that is not in my library. I concluded that there was just to much variability in the accuracy of the trend change forecasts from cycles to give me an acceptable trading methodology. Now, I admit this is a personal thing - I just cannot stand drawdown and waiting to be in a profit position as is required when trading with cycles.

But there was something else about cycles - they told me nothing about the why of market moves and I wanted something that was more science than art.To believe that markets moved according to planetary positions or some physical number periods just was not acceptable.

It was not until I began to study chaos theory and the psychology of traders that I developed a methodology that satisfied my curiosity as to why markets reverse and to give me an indication of reversal that was close enough to trade with. I set as my goal a +/- one period accuracy on reversals and a 70% to 80% reliability on the trading signals , performance which I have documented over the last ten years.

Now this is not to say that I don't believe that cycles exist - I certainly do. They just do not satisfy my criteria for a trading methodology. Others may be able to use then successfully.

 

Now regarding the discussion of the importance of volume. I also have no found no reliable way to use volume as a trading tool. However I do use measures of tic direction to give me readings on the sentiment of the market and changes in sentiment leading to price reversals. I use these every day.

 

Jim White

----- Original Message -----

From: J Curry

To: realtraders@xxxxxxxxxxxxxxx

Sent: Tuesday, January 19, 2010 7:40 AM

Subject: [RT] cycles

 

Hello Jim!
I would cycle analysis is more of an art than a science; I think
even those who follow them would often wonder if they are there - at
least at times. However, I might agree with you on the 'static'
comment, as the cycles that I track always have an average variance
of plus or minus 20% in either direction.

A similar notion could be applied to Elliott-wave; it is more of an
art than a science - but there are some who are very adept with it.
As far as statistical validity, I would doubt you would find any hard
evidence of that in any trading method (other than something slightly
above-average). if there were something that worked 100% of the time,
then please let us all know as we would like to use it :-)

as for methodology, I am going to reference Hurst's 'Profit Magic',
along with Raymond Merriman's book 'Cycles and Patterns in the market'.
these two are a good starting point for those interested in cycles. take
what you find useful, discard the rest - and then add that to what you
come up with yourself. it is certainly an evolutionary process.

where is Clyde Lee when you need him? :-)

thanks for the message
Jim

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